Currency Exchange Specialists Explained | France

Q: Why should I consider
using a currency specialist to transfer the deposit for my French home?

A. An experienced
currency trader can discuss your budget and exact requirements with you and
help you avoid the risk of currency market fluctuations eating away at your
money.

They can arrange a forward contract for you, which essentially locks in
the exchange rate at a time that suits you. This means you will know exactly
what you will need to pay for your deposit and final property payments, and how
many euros you will get for your sterling transfer.

Here's an example of
why a forward contract is so useful in this situation. Earlier this summer, Mr.
West and family engaged the services of Smart Currency Exchange to purchase a
three-bedroom home in the Languedoc.

Once Mr. West had
found his property, his estate agent put him in touch with Smart Currency
Exchange to transfer sterling into euros to pay the deposit. At this point, at
the end of July 2015, the GBP/EUR rate was 1.43, meaning that to transfer
12,000 euros (a 10% deposit on a £120,000 villa) he had to transfer just under
£7,000.

At this point,
sterling had been on an upward trajectory for most of 2015, so Mr. West opted
not to book a forward contract to transfer the rest of his sterling into euros
at this rate at a later date - meaning that he was at risk of sterling
weakening and the rest of his property costing more than expected.

Unfortunately, the
financial slowdown in China and the 'Black Monday' that followed, along with
the news that the UK would be unlikely to raise interest rates before the end
of the year, meant that less than a month later, sterling's position in the
market was much weaker than it had been when Mr. West made his transfer.

By the
end of September, when he was in a position to transfer the funds to pay for
the rest of his property and ensure his initial living costs, the €115,000 he
needed purchase cost him just over £85,000 at a GBP/EUR rate of 1.35. This was
almost £5,000 more than he had budgeted, based on the rate he had achieved over
the summer.

Mr. West's story is a
prime example of how the fluctuating sterling-euro exchange rates can
negatively affect the cost of buying property overseas, and how important it is
to use the services of a currency specialist to protect against risks and
maximise your savings.

If you need to place a
deposit on your chosen property in France, make sure you give me a call today.
We can lock in the rate you want to achieve straightaway, meaning you can plan
the rest of your money transfers with price certainty and not have to worry
that you will have to find an extra £5,000 for the same amount of money.

By staying on top of
the ever-changing exchange rates with your trader and discussing your budgeting
needs with them, they can help you to protect against these dramatic exchange
rate fluctuations and make the most of your money by booking a forward
contract.

If you have any other
big international payments coming up, for your final purchase payment, for
example, or need to make regular payments between the UK and France at the same
exchange rate, talk to your trader today about how they can help achieve price
certainty - and take a load off your mind.

Q: How is the property buying process in France different to that in the UK?

A: Buying a property in France is not particularly complicated - in many ways, it is clearer, safer
and more straightforward in France than in the UK.

The key difference is that
the sale of a property becomes binding earlier in the process in France, which
means that, should you find a property on your viewing trip and put in an offer
that is accepted, you can pretty much return home safe in the knowledge that
no-one else will be in a position to buy it.

Here's a summary of the buying process in France:

Bon de Visite and making an offer

If you are buying through an agent, you will be asked to sign a Bon de Visite. This is normal
practice in France and simply means that should you decide to proceed with a
purchase, you will make the offer through them and not go off with another
agent or privately approach the vendor.

It is not commitment to an actual
purchase. You can make an offer just as you would in the UK and the agent must
put that forward to the seller.

The Compromis de Vente

This is the first contract, equivalent to the Exchange of Contracts in the UK, and is signed by
both buyer and vendor, which means that both parties are committed to
purchasing and selling the property.

Upon signature, the vendor is bound to go
ahead with the sale, but you are given a seven-day 'cooling off period' and can
walk away from the purchase in this time.

After the seven-day period is up, you too are bound to go ahead with the purchase. At this stage,
you must pay the deposit of around 10% of the agreed purchase price, to be kept
in a separate account by the notaire. There will be a target date for signature
of the Acte de Vente included in the Compromis, but this can be changed at any time to suit both parties.

Your currency trader can advise you on the best time to book a forward contract to protect the price
of this deposit, and for the final payment to complete the purchase.

Opening an account with Smart Currency Exchange gives you access to your own experienced trader, who, like David can guide you through the process and make recommendations about the best currency strategy to maximize your money.